China's coal mining and washing sector saw capacity utilization fall to a multi-year low in the third quarter of 2025 (Q3 2025), as prices surged during the industry's typically peak season, which is unusual in recent years.

The coal industry capacity utilization stood at 68.9% in Q3, down 3.8 percentage points (pps) year on year and 0.4 pp from Q2, showed data from the National Bureau of Statistics (NBS). For the first three quarters combined, the rate was 70.0%, a decline of 2.3 pps from the same period last year.

Despite a rare seasonal price rally in mid-August, the rebound failed to spur stronger production. NBS data showed that China's coal production peaked in March and June figures marked the second high, while July and August both were the year's lows, and only began to recover in September.

Multiple factors contributed to the weaker production. Prolonged heavy rains during the main flood season disrupted mining, particularly at large open-pit mines in Shanxi, Shaanxi, and Inner Mongolia, while transportation bottlenecks from road and railway congestion raised shipment difficulties.

At the same time, intensified overproduction inspections forced some mines to halt operations for rectification, and local safety and environmental checks further constrained output.

Many mines also adopted a strategy to lower production to ensure reasonable prices, which also had some impact over production.

As a result, coal capacity utilization in Q3 fell to the lowest level since the same quarter in 2020. NBS data also showed that the country's raw coal output rose only 2.0% year on year in January–September, narrowing by 3.4 pps from the first half of the year.

Looking ahead, coal production is expected to pick up in Q4 as rainfall decreases and heating demand rises, though year-on-year growth will likely remain negative due to last year's high base.

In contrast, China's power, heat, gas, and water production and supply sector recorded a stronger performance. Its Q3 capacity utilization reached 74.3%, flat from a year earlier but up 2.8 pps from Q2. The sector's capacity utilization rate in first three quarters reached 73.2%, up 0.9 pp year on year.

Seasonal temperature effects drove a clear rebound in power generation, though slowing economic growth kept electricity consumption increases modest.

Expanding renewable capacity also pressured capacity utilization rates of the power industry, while low inflows at major southwestern hydropower stations weighed further on overall performance.

Despite record-high power demand this summer, adequate supply and local policy measures kept peak-load differentials contained, limiting thermal power plants' load factor gains.

Entering Q4, colder weather is expected to lift the utilization rate again, with forecasts suggesting a colder-than-average winter that could further boost electricity demand.

Overall, China's industrial capacity utilization reached 74.6% in Q3 2025, up 0.6 pp from Q2 but down 0.5 pp year on year. By sector, capacity utilization rate for mining, manufacturing and power, heat, gas, and water supply industry stood at 72.5%, 74.8% and 74.3%, respectively.